Tuesday, November 25, 2008

Back near the
dawn on of time - I think it was 2002 - I declared QAN a SELL,
just before an attempt to launch a competitor (on domestic
routes) failed to secure funding. Short term, QAN's price spiked - that was always
gonna happen if Ansett II failed to take off - and I got stirred about it for a couple of weeks. As I said atthe time, though: the 'ratio decidendi' for the SELL was not the
emergence of a competitor: no... although oil was under $35 a barrel at the
time, your Beloved GT indicated that QAN's big problem over the longer
terms was going to be a massive increase in the price of jet fuel (I
even put in a chart).

Anyway - that was an interesting time. How I wish that the InvestorWeb Archive was still available so that I could compile a massive set of excerpts of my pre-2004 wisdom. I could bore you to death with that, Dear Reader.

The attempt to revive Ansett
was stymied by someone who happened to be on the board of a big bank
(who the consortium hoped would be the financier) and who also happened
to be on the board of QAN.

This is how finance works, dear Reader. There are a few
(surprisingly few) people who become professional Board members, and
they exploit stuff they discover on one Board, and use it to the
benefit of whoever pays them the most.

I only point this out because my fair value for QAN was - and
still is - under $2, but with the caveat that it can be bought for a
trade if it's around the $2 level, so long as it is highly
oversold and the rest of the market is technically 'primed'.
It's just a 'beta due to insto popularity' play.

A couple of people have wondered aloud if there was going to
be a QAN option play, given the bad news. A 60-odd
percent fall in profits, even given QAN's - shall we say 'innovative'?
- method of accounting for option premiums on their fuel hedging. So
the actual damage must be pretty significant - let's see if they come
back to the market yet again in search of capital.

Let's just say that I think that QAN's accounts can be relied
on to exactly the same extent as US economic statistics.

Anyhow. NO.
(to the QAN option play). The market is not in a technically
constructive phase. It is having a bear bounce, which may appear
impressive, but which could fall apart in the time it takes me to write
three paragraphs.

I heard something about Babcock
& Brown today - that receivers might be appointed.
At this stage I have not even bothered to check, so it's a bit
irresponsible to raise it. Still, it seems pretty clear that they will
not be able to roll over debt at any sort of decent terms, and there is
no way in creation they could get subscription to a capital raising...
the end seems obvious, no?

Major Market Indices

The broad market - the All Ordinaries (XAO)
- surged a whopping 186.6 points (5.51%), finishing at 3575.4 points.
The index hit an intraday high of 3575.4 at 4:15 pm, while the low for
the day was 3500.3 - set at 2:28 pm Sydney time.

I guess it has to happen once in a blue moon - the NuffNuff
Orgasm (where the nuffies dive in 'at market' at the open) didn't
result in the stench of burning nuffie-fur. That said, the closing high
(generated solely by the closing match-out process, which is
notoriously corrupt in Australia) was still only about 10 points above
the 11 a.m. level. At about 2:30 p.m., the index had fallen back to
touch 3500.3 (let's call that 3500), and from there it rallied about 40
real points and another 20-odd fake 'closing matchout' points.

Hope... you can smell it. There has not been the slightest
whiff of genuine fear
during this whole decline. Everybody has been looking for the
turnaround catalyst, the magic trick that gets everyone out of the
shit.

Sooner or later, folks will wake up and it will dawn on them
that there is no
magic trick.

Jeeez, who would have though? It turns out that if you borrow
six or eight times your income and spend it on an asset that is trading
at a massive overvaluation, it stings a bit when the market reverts
towards fair value. (Note: property prices in Straya have not even started their
correction yet - the balance sheet sickness currently afflicting
domestic banks is largely externally sourced. There is the domestic
stuff to come next).

Total volume traded on the ASX was 1.45bn units, 13.9% above
its 10-day average of 1.27bn shares.

The ASX's daily listing of all stocks included 1117 different
3-letter FPO's which traded (i.e., had non-zero trade volume). Of
these, 614 issues rose, with volume in rising issues totalling 1.08bn
units; there were 277 declining stocks, which traded aggregate
declining volume of 293.2m shares.

Of the 489 All Ordinaries components, 303 rose while 113 fell.
Volume was tilted in favour of the gainers by a margin of 4.1:1, with
958.76m shares traded in gainers while 232.91m shares traded in the
day's losers.

The Index that forms the cash basis for the SPI Futures - the S&P/ASX
200 (XJO)
- hurtled skyward to the tune of 198.3 points (5.79%), closing out the
session at 3623.4 points.

The "heavy hitters" of the Australian market - the ASX
20 Leaders (XTL)
- had a bit of a moonshot, stacking on 137.6 points (6.70%), closing
out the session at 2190.1 points.

Among the 20 big guns, 18 index components finished to the
upside, and of the rest, 2 closed lower for the session. The 21 stocks
which make up the index traded a total of 216.41m units; 18 index
components rose, with rising volume amounting to 190.34m shares, while
the 2 decliners had volume traded totalling 22.03m units. The major
percentage gainers within the index were

ANZ Banking Group (ANZ),
+$1.65 (12.79%) to $14.55 on volume of 17.6 million shares;

Commonwealth Bank Of Australia (CBA),
+$3.78 (12.51%) to $34.00 on volume of 8.4 million shares;

BHP Billiton (BHP),
+$2.84 (12.15%) to $26.22 on volume of 29.9 million shares;

Woodside Petroleum (WPL),
+$3.43 (11.41%) to $33.50 on volume of 3.8 million shares; and

Westfield Group (WDC),
+$1.09 (8.35%) to $14.15 on volume of 6.5 million shares.

On the less salubrious side of the big-cap fence, the
following stocks were the worst-performed within the index:

Brambles (BXB),
-$0.56 (7.77%) to $6.65 on volume of 12 million shares; and

At the other end of the market-cap spectrum, the ASX
Small Ordinaries (XSO)
added 44.7 points (2.80%), closing out the session at 1640.7 points.

Among the stocks that make up the Small Caps index, 138 index
components finished to the upside, and of the rest, 51 closed lower for
the session.

The 209 stocks which make up the index traded a total of 308.33m units:
volume in the 138 gainers totalling 217.46m shares, with trade
totalling 81.22m units in the index's 51 declining components. The
major percentage gainers within the index were

Aquarius Platinum (AQP),
+$0.75 (29.64%) to $3.28 on volume of 1.7 million shares;

Lynas Corporation (LYC),
+$0.07 (28%) to $0.32 on volume of 4.5 million shares;

Becton Property Group (BEC),
+$0.02 (27.54%) to $0.09 on volume of 2.6 million shares;

Independence Group NL (IGO),
+$0.33 (26%) to $1.58 on volume of 1.2 million shares; and

Market Breadth

GICS Industry Indices

Among the 11 industry indices, things were relatively upbeat:
every sector bar one managed to keep its head above water.

The best performing index was Materials (XMJ),
which added 680.6 points (9.27%) to 8021.1 points. The 45 stocks which
make up the index traded a total of 359.05m units; 39 index components
rose, with rising volume amounting to 345.06m shares, while the 5
decliners had volume traded totalling 10.12m units. The major
percentage gainers within the index were

Aquarius Platinum (AQP),
+$0.75 (29.64%) to $3.28 on volume of 1.7 million shares;

Lynas Corporation (LYC),
+$0.07 (28%) to $0.32 on volume of 4.5 million shares;

Independence Group NL (IGO),
+$0.33 (26%) to $1.58 on volume of 1.2 million shares;

OM Holdings (OMH),
+$0.19 (22.62%) to $1.03 on volume of 4.6 million shares.

Second in the index leadership stakes was Property
Trusts (XPJ),
which gained 75.1 points (8.38%) to 970.9 points. The 21 stocks which
make up the index traded a total of 155.12m units; 15 index components
rose, with rising volume amounting to 125.22m shares, while the 5
decliners had volume traded totalling 22.67m units. The major
percentage gainers within the index were

Mirvac Group (MGR),
+$0.19 (17.12%) to $1.30 on volume of 9.7 million shares;

GPT Group (GPT),
+$0.12 (13.22%) to $0.99 on volume of 31.2 million shares; and

Apn/Uka European Retail Property Group (AEZ),
+$0.01 (12.33%) to $0.08 on volume of 1.3 million shares.

The bronze medal for today goes to Financials ex
Property Trusts (XXJ),
which climbed 269.9 points (7.36%) to 3937.9 points. The 27 stocks
which make up the index traded a total of 114.1m units; 17 index
components rose, with rising volume amounting to 84.95m shares, while
the 9 decliners had volume traded totalling 29.1m units. The major
percentage gainers within the index were

The only declining index for the session was Industrials
(XNJ),
which dipped 23.3 points (0.75%) to 3081.5 points. The 32 stocks which
make up the index traded a total of 155.25m units; The 8 decliners had
volume traded totalling 55.84m units, and 21 index components rose,
with rising volume amounting to 98.95m shares, The major percentage
decliners within the index were

Brambles (BXB),
-$0.56 (7.77%) to $6.65 on volume of 12 million shares;

Asciano Group (AIO),
-$0.07 (5.73%) to $1.07 on volume of 10.5 million shares;